Tag: business performance

Categories
Process & Business Expansion Strategy

6 Effective Ways To Measure Your Business Performance

6 Effective Ways To Measure Your Business Performance
6 Effective Ways To Measure Your Business Performance

Summary: How do you know whether your business is performing as expected or if you are on track to achieve your goals?

Business is unpredictable! This is why measuring its output and evaluating the effectiveness of your strategies is very critical for its growth. However, despite you having all your business objectives outlined and your strategies to achieve them in place, will you know that you are on the right path? Also, how do you know whether your business is performing as expected or if you’re on track to achieve your goals?

Being an entrepreneur it is vital to know what works for your business, and what does not. Be it small, middle, or large, every company has its share of success and failure. So it is essential to constantly keep a finger on your business performance to stay ahead of your competitors.

According to a Gartner report, “organizations that use predictive business performance metrics can increase their profitability by 20%.”

Here are six crucial indicators that will tell you all you need to know about your business’s progress:

1. Net Profit

Net profit is the amount that remains after deducting a company’s expenses, taxes, and interest payments over a given time. It is one of the most reliable parameters when it comes to analyzing financial status. When evaluating your business performance, the net profit should be converted into a percentage of revenue- the net profit margin. Businesses must stay ahead of the profit margin in their industry to remain competitive. Anything below the margin means your business is in poor financial status. If you find it difficult to evaluate your business performance, you can hire a business coach too!

2. Customer Satisfaction

Another important way to measure the business performance of your small business is customer satisfaction. Happy customers can impact other metrics directly. Customers can help you improve your business performance. If your customers are satisfied with your products or services, then your business is making progress.

But how do you measure customer satisfaction? You can do that through various surveys, reviews, and honest feedback from your customers. If your business is at a very early stage, you can start developing a client list with an email address to track customers. This way you can keep a count on your new customers and build a strong relationship with your clients.

3. Employee Retention Rate

A good employee retention rate indicates a business with a healthy work culture and with processes in place for success. A poor employee retention rate is a glaring sign that the company is wasting its resources on hiring, training, and absorbing new employees. This will prevent a company from utilizing its resources to drive growth.

4. Set Up a Break-even Point

Setting up a break-even point or a target can help you evaluate the business performance of your small enterprise. The set target is the number you need to achieve in a given period (monthly or quarterly) for the company to cover its expenses to sustain. It is important to reach the break-even point, even if your business is not making a profit.

5. Sales Indicators

The volume and frequency of sales can provide everything you need to measure business performance. You can segregate the sales data into new customers, sales to existing customers, how much profit a particular product or service is making, or any other categories that might prove vital for the business. Keeping track of these numbers can provide invaluable insights into your business performance.

6. Analyze your Goals

While evaluating your business performance, it is also essential to assess your expectations. Many people disregard their happiness when it comes to evaluating business performance. But try to consider your perception when measuring your business performance. It always helps!

The idea of managing a business is easier said than done and we completely agree with you. This is why to help you move forward with your business goals, we at Bada Business offer an exclusive Business Coaching Program that comes with Foundation courses, specialized courses, and value-added courses.

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Categories
Business motivation

Evaluation of Business Performance: 5 Ways to Measure True Success

Evaluation of Business Performance
एंटरप्रेन्योर

“What gets measured,” the infamous Peter Drucker famously observed, “gets managed”.

Business is unpredictable, and what makes it more complex is the cut-throat competition. The trends that are ‘in’ today will be ‘out’ tomorrow. So the only thing that you can count on is that everything in the business world continuously changes.

Hence, it is super important to measure your business performance constantly. A Gartner report suggested that organizations that use predictive business performance metrics can increase their profitability by 20%.

Being an entrepreneur it is vital to know what works for your business, and what does not. Be it small, middle, or large, every business has its share of success and failure. So it is essential to constantly keep a finger on your business performance to stay ahead of your competitors.

If you too want to evaluate the business performance of your small business, here are 5 ways you can do it:

  1. Analyze Financial Statements

Money is important! And, one of the best ways to evaluate the success of your small business is to see how much revenue your company is generating. If your business is generating revenue, then you can pursue your entrepreneurial dream. Without it, your business will not survive in the long run.

  1. Check Customer Satisfaction

Another important way to measure the business performance of your small business is customer satisfaction. Customers can help you improve your business performance. If your customers are satisfied with your products or services, then your business is making progress.

But how do you measure customer satisfaction? You can do that through various surveys, reviews, and honest feedback from your customers. If your business is at a very early stage, you can start developing a client list with an email address to track customers. This way you can keep a count on your new customers as well as build a strong relationship with your clients.

  1. Reach Break-even Point

Setting up a break-even point or a target can help you evaluate the business performance of your small enterprise. The set target is the number you need to achieve in a given period (monthly or quarterly) for the company to cover its expenses to sustain. It is important to reach the break-even point, even if your business is not making a profit.

  1. Sales Indicators

The volume and frequency of sales can provide everything you need to measure the business performance. You can segregate the sales data into new customers, sales to existing customers, how much profit a particular product or service is making, or any other categories that might prove vital for the business. Keeping track of these numbers can provide invaluable insights into your business performance.

  1. Assess your Expectations

While evaluating your business performance, it is also important to assess your expectations. Many people disregard their happiness when it comes to evaluating business performance. But try to consider your perception when measuring your business performance. It always helps!

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To know more about the course, click here: https://www.badabusiness.com/?ref_code=ArticlesLeads

Categories
Startup

Business Performance Indicators: 4 Important Metrics Every Start-Up Should Track

Key Performance Indicators of Business| Representational Image (Photo Credits: Pixabay)
Key Performance Indicators of Business| Representational Image (Photo Credits: Pixabay)

It is essential for business, especially in their early stages, to keep a regular check on its various performance indicators. A start-up should have a clear understanding of various KPIs or Key Performance Indicators that measure the quantitative aspect of business activities. These metrics or indicators not only tell the current status of business but are also helpful in predicting the future of the enterprise. A wise entrepreneur always takes into account key business metrics while taking any decision related to business.

Business Metrics or Key Performance Indicators are nothing but data pertaining to various business activities like production, customer retention, return on investment, daily turnover, and self-generated goodwill among others. A careful analysis of all the data helps the start-up owner to evaluate his business’ day to day activities as well. It helps in identifying the loopholes as well. Here are 5 Key Performance Indicators Every Start-Up Owner should know and track –

Cost Of Acquisition (CoA) –

The first metric is the cost of acquisition, it measures the cost incurred to acquire each customer. So it tells a firm how much money goes in getting a customer. Every business needs customers to survive. It is important for an entrepreneur to increasingly acquire new customers and retain the old ones.  To attract the customers, firms make lot of investment in marketing and advertising. It is therefore important to know whether the expenditure is worth it or not.

Here is how to calculate Cost of Acquisition for your business –

Cost of Customer Acquisition = Total Sales & Marketing Cost / Number of New Customers Added

Return on Advertising Spending –

For a firm to establish it in the market, it needs to reach the masses and creates its brand presence. An upfront way to do this by going for promotional activities. Advertising is the main component of a promotional and marketing plan. A huge chunk on firm’s funds goes into advertisement, it is therefore important for any entrepreneur to keep a track on the returns received by investing a particular amount in advertising.

Here is how to calculate Return on Advertising Spending for your business –

Return on Advertising Spending = Total Sales/ Advertising Spending

Customer Loyalty and Retention Rate –

According to a study a firm incurs 70 per cent more expenditure to acquire new customers than to retain the old ones. It is important to know that how many customers are willing to avail the products and services of the firm again. It also is a direct measure of customer satisfaction. In the initial years, loyal customers are important for start-up to deepen its roots in the market. Therefore, an entrepreneur should keep a check on this ratio as well.

Here is how to calculate Customer Retention Rate for your business —

Retention Rate = (No. Of Customers at end of Period- No. Of Customers acquired during Period)/No. Of Customers at beginning of Period

Rate of Return –

One of the most popular business metric and important business performance indicator is the rate of return. It is the net gain or loss of an investment over a specified time period, expressed as a percentage of the investment’s initial cost. All the stake holders have a special interest in knowing the RoR. It also signifies the level of growth of a firm. For a start-up it is important, especially those dependent on external funds, it is crucial to keep a tab as to how much return is being earned. Prolonged negative rate of return leads to the winding up of the firm.

Here is how to calculate the Rate of Return for your business –

Rate of Return = {(Current value of Investment – Initial Value of Investment)/ Initial value of Investment } X 100

A regular track of these metrics helps entrepreneur in figuring out whether the business is on right track or not. It helps in taking quick corrective measures as well. Proper analysis of the KPIs helps in ensuring long term growth of the start-up as well as help to decide upon future course of actions.

 

 

 

Categories
Startup Strategy

‘Innovation Culture’ Important for Performance and Resilience of Indian Businesses, Shows Study

Innovation important for business resilience, shows study (Photo Credits: Pixabay)
Innovation important for business resilience, shows study (Photo Credits: Pixabay)

Any firm that aims for a long-term survival and growth, innovation is of utmost importance. Owing to rapid changes in the macro and micro environment of business operation, a firm needs to be flexible and accommodating to new opportunities and threats. A dynamic and innovative attitude becomes important for an overall development and existence of the organisation. The outbreak of COVID-19 pandemic, for instance, is one such situation where innovation was highly desired for to keep the firm afloat.  According to a recent study by Microsoft and IDC, 77 per cent of Indian organisations have found innovation to be critical or important to their performance and resilience, amid the worldwide pandemic. Around 439 business decision makers and 438 workers were surveyed in India within a 6-month period, before and since COVID-19 outbreak.

The study concluded that the businesses in India have increased their ability to innovate by 4 per cent in mere six month time period, as it became essential to cope up with the threats of the external environment. It also revealed that around 78 per cent of the Indian organisations are speeding up digitalisation in a variety of ways to adapt to the new reality. Thereby launching digital products and introducing digital payments, and increasing moving towards e-commerce and automation by adapting the innovative culture in businesses. As a result, Indian companies are aiming at increasing their revenue from digital products and services to 50 per cent in the next three years from 36 per cent at present.

“Innovation is no longer an option, but a necessity. We have seen how the recent crisis has spurred the need for transformation; for organizations to adapt and innovate in order to emerge stronger,” Rajiv Sodhi, Chief Operating Officer, Microsoft India, told reporters in a virtual round-table. “We commissioned this research to gain better understanding of the relationship between having a culture of innovation and an organization’s growth. But now, more than achieving growth, we see that having a mature culture of innovation translates to resilience, and strength to withstand economic crises to recover,” he added.

Since the external environment, amid the COVID-19 outbreak, has necessitated the innovation and diversification of business operations and its products, more and more firms are looking for opportunities and areas to innovate. According to the survey, 64 per cent of respondents acknowledged that innovation has become easier in the post-COVID-19 era. Prior to the pandemic, only 32.5 per cent of Indian business found innovation in their products and services easy. The study introduced the culture of innovation framework, which spans the dimensions of people, process, data, and technology, to assess organizations’ approach to innovation.

According to the survey, as much as 45 per cent of the Indian organisations feel that their priorities for the next 12 months will be to focus on technology as most essential for business resilience and recovery. Some best practices will include developing a culture that promotes investing in disruptive technologies and leveraging data to differentiate and enhance products and services, the study said.

 

 

 

Categories
HR & People Management

How to Evaluate your Business Performance

Evaluate your Business Report Card!
 

No business can survive without evaluating its business performance. Just like in school, how we review our subject preparation and how have we scored, businesses are no different. Once you have identified your market position and your hold, evaluating business performance will help you decide how to cross the next level. 

Reviewing your progress is useful in many ways: 

  • Helps you remove the uncertainty about how the business is performing
  • How to make the most of the market opportunities
  • Any revision needed in business plans
  • How to get the next set of customers 

Here are some criteria’s that can help you evaluate your business performance:

1. Look at your Financial Statements

  • There is no better way to evaluate business performance than to have a close glance at your income statement, balance sheet and cash flow.
  • You need to check the money flow of the business, this will give you an idea where you are losing money and which are the areas of improvement

2. Review your key business drivers- Sales & Profits

  • Evaluate is your sales target as per plan, which areas are giving you better sales and which are weak in numbers
  • This will help in finding loopholes where sales are dropping
  • Similarly, profitability is what keeps your business thriving. Steady profits with very low dips is a sign of steady growth.

3. Customer Satisfaction

One important principle to measure the success of small businesses is customer satisfaction. If the customer is not happy with your product or service chances are he is not going to come back again

There are a few ways of evaluating business performance on the basis of customer satisfaction:

  • Ask for feedback; analyze the ratio of positive to negative feedback
  • Take constant reviews, this helps in knowing what the consumer thinks of the product and can help you make changes for the better
  • Assess your customer acquisition cost, if you are getting more customers this should be on the decline
  • Keep a track of repeat orders, this shows that the customer is happy and is returning for your product or service multiple times

4. Be Updated about the Market & Competitors

  • Keep a close look on the market and keep evaluating your business performance with how the market is doing
  • If your growth has slowed down and so has of your competitors, chances are the market might be going through a slowdown
  • Everyone feels motivated when the tide is high, but if you find profits decreasing, don’t lose heart. It may be an indication to make some changes to your product, bring in some innovation and cut down unnecessary costs
  • It is useful to do a SWOT (strengths, weaknesses, opportunities and threats) analysis to find out more about what your competitors are doing currently and what the market is saying about them

5. Conduct Performance Reviews

  • Employees are your essentials- without them, the business can turn upside down. It is therefore essential to conduct quarterly performance reviews to evaluate business performance
  • A performance review helps you gauge whether the employee can handle additional responsibilities or is he unhappy about too much work being delegated
  • These reviews also help in maintaining a healthy competitive spirit in the company with everyone trying to give their best

6. Employee Training

  • Keep your employees updated about what is happening in the market
  • Organize skilling workshops and training sessions for them, so that the employees are satisfied with their skill development
  • Employee satisfaction and training can go a long way in enhancing business performance

Use this review to redefine your business goals and find answers to important questions like-

Where the business is going?

What is lined up in the next phase of growth?

A strategic analysis to evaluate business performance needs to be done on a constant basis if you want to be relevant, successful, and take your company to greater heights.